Elon Musk Warns of Severe Recession — Urges the Fed to Cut Interest Rates Immediately

Tesla CEO and Twitter boss Elon Musk has warned of a severe recession in the U.S. The billionaire stressed that the Federal Reserve needs to cut interest rates “immediately,” emphasizing that the Fed is “massively amplifying the probability of a severe recession.”

Elon Musk Warns About Severe Recession

Tesla CEO and Twitter chief Elon Musk warned about a severe recession in the U.S. on Wednesday.

Replying to Vincent Yu who tweeted that he is “expecting a real economic recession in 2023,” Musk said the trend is concerning, emphasizing that the Federal Reserve “needs to cut interest rates immediately.” The billionaire stressed that the Fed is “massively amplifying the probability of a severe recession.”

Sven Henrich, founder and the lead market strategist for Northmantrader, joined the discussion. He replied to Musk and Yu: “Ironically the Fed continues to project positive GDP growth for next year despite all the obvious signs. But they did the same thing in 2008. As always they will panic cut rates once the recession impact is here & then blame unforeseen factors.” In another tweet, Henrich described:

The Fed stayed too easy for too long totally misreading inflation and now they’ve tightened aggressively into the highest debt construct ever without accounting for the lag effects of these rate hikes risking they’ll be again late to realize the damage done.

Musk concurred, tweeting: “Exactly.”

Many people agreed with Musk. One tweeted: “Musk is actually right about this. Inflation is now primarily being driven by housing, and interest rates are so high at this point they’re crashing investment in home construction, threatening to worsen the underlying problem.” Another wrote: “Correct. Higher rates hurt people. The notion of rate increases as an inflation hedge has always been sketchy.” Some people said the Fed “should be abolished.”

In October, Musk said the recession could last until spring 2024. In August, he said that he believes inflation has peaked and we will be in a recession for 18 months. In September, the Tesla boss warned that a major Fed rate hike risks deflation.

Do you agree with Elon Musk about the Fed and a severe recession? Let us know in the comments section below.